Coinbase CEO Brian on FTX issue: We don’t engage in this type of risky activity

1/ First off, I have a lot of sympathy for everyone involved in the current situation with FTX – it’s stressful any time there is potential for customer loss.
2/ Second, Coinbase doesn’t have any material exposure to FTX or FTT (and no exposure to Alameda).
3/ I think it’s important to reinforce what differentiates Coinbase in a moment like this. This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities, and mis-use of customer funds (lending user assets).
4/ Coinbase has always strived to be the most trusted player in the space, and we don’t engage in this type of risky activity.
5/ We don’t do anything with our customers’ funds unless directed to by the customer. We hold all asset dollar for dollar, and users can withdraw their money at any time.
6/ We are incorporated in the US, and publicly listed in the US because we believe that transparency and trust are so important. Every investor and customer can see our public audited financials, which shows how we hold customer funds. We’ve never issued an exchange token.
7/ Part of the issue here is that regulators have been focused onshore in each of their respective markets, while customers have moved offshore to companies with more opaque and risky business practices.
8/ To take the US as an example, 95%+ of crypto trading has developed overseas because crypto regulation in the US has been hard to navigate. That’s bad for the US and Americans are still losing money in these overseas blowups.
9/ The temptation from events like these is to call for more heavy-handed regulation. This would just make the problem of crypto companies and crypto users going overseas worse.
10/ We should continue to work with policy makers to create sensible regulation for centralized exchanges/custodians in each market (as we’ve been doing for some time), but then we need to see a level playing field enforced, which hasn’t happened to date.
11/ Long term, the crypto industry has an opportunity to build a better system with DeFi and self-custodial wallets that don’t rely on trusting 3rd parties. Instead, you can trust in code/math and everything can be publicly auditable on-chain. This is a topic for another day…
12/ We decided early on to be the most trusted crypto company out there, and the events of the last 24 hours underscore why this has been so important. We’ll continue to work with regulators around the world and help build trusted and reliable products for the industry.
13/ Read more about our approach to transparency and risk management on our blog -> https://www.coinbase.com/blog/our-approach-to-transparency-risk-management-and-consumer-protection

Follow: @brian_armstrong

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